The following information was gathered for Royals Company: $$\begin{array} { l r }
\text { Budgeted direct-labor hours } & 7,750 \
\text { Actual direct-labor hours } & 8,100 \
\text { Budgeted factory overhead } & \$ 220,875 \
\text { Actual factory overhead } & \$ 224,970
\end{array}$$ Assume the cost driver is direct-labor hours.The amount of factory overhead applied is _____.
A)$220,875
B)$230,850
C)$215,295
D)$224,970

Question

The following information was gathered for Royals Company: $$\begin{array} { l r } 
\text { Budgeted direct-labor hours } & 7,750 \
\text { Actual direct-labor hours } & 8,100 \
\text { Budgeted factory overhead } & \$ 220,875 \
\text { Actual factory overhead } & \$ 224,970
\end{array}$$ Assume the cost driver is direct-labor hours.The amount of factory overhead applied is _____.
A)$220,875
B)$230,850
C)$215,295
D)$224,970

Quizplus · Accepted Answer

The factory overhead rate is calculated as Budgeted Factory Overhead / Budgeted Direct-Labor Hours = $220,875 / 7,750 = $28.50 per hour. The applied overhead is then Actual Direct-Labor Hours * Overhead Rate = 8,100 * $28.50 = $230,850.

The Following Information Was Gathered for Royals Company Assume the Cost Driver Is Direct-Labor Hours